Life relates to trading and trading relates to life. Constantly revealing, unfolding before us as we trade and live, so I write about how my life relates to trading and how I trade the markets. Along the way I share my opinions on anything that evokes my passion or tickles my funny bone trying not to forget that enjoying life is the best part of living.

Wednesday, July 28, 2010

Hardly a day goes by without news about medicine. Besides the highly controversial health care bill constantly being debated, there are numerous categories of cures up for discussion. It wasn't that long ago that hot debate raged about embryonic stem cell research and now the new and almost constant buzz is about local legalization of medical marijuana.

There are traders who trade on the news about medical breakthroughs, new wonder drugs awaiting approvals or test results. There are traders who specialize in pharma and health and to them I tip my hat. I've tried trading them but after a few singes to my account, I decided it was no my cup. I just hate waking in the morning to find that my favorite promising drug company just folded due to a test that turned.

Some drug discoveries barely make a ripple, while other's are heralded as the next aspirin. I do not know how it is decided, as to which drug will be pushed and which not, but pushed they are via the news and advertising, and for a long time now I've been wondering about where or if it will end. There is no doubt that multi millions are spent on campings and more multi millions are made and I am not one to begrudge or change the flow of free trade and competition. Yet I still wonder, to what end are we so much in love with the magic pills they offer through the boobtube.

Drugs have probably become one of the top advertised products now invading our homes. Most of them would be laughable if people truly listened to all the side effects, (after all who wants to pop a pill that says the side effect maybe what already ails you or that it may cause your death), but those smiling faces are so convincing that the drug most likely will cure anything we want as long as "we believe".

What concerns me most about those ads is not what the adults will succumb to, but what our children are learning: "All that ails you can be solved with a pill." ? Children hear the jingle, see the smiling happy people, and equate the two, like it or not. I bet most parents are so tuned out that they don't educate their children about ads in general, let alone an ad that will cure what ails which plays straight into the hand of those who like to control our lives.

How clever to teach this to children by those with much to gain; and I don't mean just the drug companies. I mean the endless list of people who know what our choices should be. Those who wish to have control over all aspects of our lives. Those sitting in yet to be determined government regulatory offices over our health matters. As choices are reduced little by little, drugs available, legally or not, more and more, if you have any concern for the future of your generation, I seriously suggest starting to teach your children about control and the lack of it.

The ads will not go away, nor will they become less invasive. Discerning differences about what is good for you and what is not, will forever be the choice you must preserve for yourself . Unless of course you prefer chasing rabbits.

Tuesday, July 27, 2010

Too many traders saying too much can be distracting and demoralizing. Focus gets lost & trading becomes a chase. That's when you should realize that there is no substitute for confidence.

The problem is too many traders confuse confidence with consensus: thinking that if others agree, than it must be right or okay to buy/short "xyz" company. Often finding that not everyone can be right all the time, and that perhaps it was better to listen to the "gut" than to "listen" to Twitter. Remember there are always good ideas out there but if your whole day is spent on chasing them, consider signing yourself out of "trader" status.

It is really important to lower the interference and raise the focus when trading. If you are well prepared as a trader, you need to stick with your plan and not be distracted by other ideas. These rules may help:

If you find that you are distracted by posts, turn off the site, hide it or make it mute.

Save the learning for non trading hours; that is, when you are not in the middle of a trade or looking for a new one

Make it a rule to check out an idea you find interesting. Ideas, that are good and your style can adapt, are just as good after you tested them.

Confidence comes out of your own actions and not the ideas of others and like self-esteem, it cannot be awarded it can only be earned. So give yourself some credit and turn off the noise and not the knowledge that you have acquired. Trade your game then hone your skills. There is plenty of time for banter afterwards.

Monday, July 26, 2010

I'm not used to dictating. When I write, I usually use my 10 fingers and click away on the keyboard. Today, I'm trying out this new program "Dragon", "Naturally Speaking" by Nuance, Inc. (NUAN) to write my words. Why you may ask? It is because I am trying to find a faster way to write my quickly flowing thoughts. It is much like trying to enter a trade quicker than it takes to type.

Quick actions when thoughts can command would be the ideal to do most of the things we traders try to attain. With today's electronics, we want to have the best tools to maximize our potential gains, and oft that means being able to click the entry at the same moment as the thought occurs. Similarly, I find that the thoughts running through my head about an idea, also quickly fade if I cannot get it on paper fast enough. Although this has not changed my ability to write good articles, it has frustrated me at times when my muse or channeling ability seem to go faster than my 10 fingers can carry.

But when trying the "Dragon",(my pet name for it,) I find that other frustrating events occur. For one, "Dragon", like all pets and programs, needs to be trained. It is expected and at the same time one needs to be accepting that training and learning a program will take some time. However, what else I have found is that "Dragon" seems to like to add words where none have been spoken. In other words, it attempts to finish my thoughts before I even have them. I'd like to think that its a way of channeling except that the subject matter is not very well followed, and leads the purpose of my articles astray. Leaving me with more corrections to make post my dictation, than the original story may have taken if I just went ahead and typed it.

Obviously "Dragon" and I still have some training work to do. It is a reminder, yet again, that "machines" are only as perfect as man's ability to teach and as a teacher I have often found frustrating not to be able to infuse my students with all the nuances of knowledge.

So, for now, until I can tame my "Dragon" to be more precise, it will remain a successful tool for my day trading room where I command it to let people know about upcoming trade entries, while my fingers are busy setting up and searching for more trades. In this, "Dragon" does very well, except for a few funny typos, which at times leave us more amused than amazed, naturally.

Thursday, July 22, 2010

When most people buy into a certain direction of the market is when the market decides to turn. Hence my saying "When everyone joins the parade, it's time to become a spectator". As day traders however, we are not supposed to care about which side the market is on as long as we are on the right side.

What becomes difficult for most of us is the truth about our humanity. We are, after all, social beings and like to do things together. Which also means we get influenced by each other for exactly that reason. In our social make up is the desire to be included and what better way than to reach consensus and therefore a social bond; which can mean that we try to prove ourselves in order to be accepted.

When we see people have fun, we want to partake in the festivity and look to create it for ourselves or we may follow it blindly oft forgetting to check within ourselves to see if the activity justifies the investment. So we can blind ourselves to the possibility that the act we are now entering may not be one that we would normally choose. Forgetting to check with ourselves may help us to lose sight of our person and our goal. It is where we become most vulnerable but also where we tend to jump with abandon. However when reality hits, it is we who may have been abandoned by the parade that kept rolling to the next thrill leaving us behind stripped of our
dignity if not also our wealth.

Being on the right side means staying true to your own style and not chase what looks good at the moment. Not all trades can be taken, followed nor be right. Keeping to our own rules keeps us safe to be available for connections with a right partner, the right trade and trader with whom we can continue to dance. Knowing also that the parade will return to town testing yet again our conviction.

Tuesday, July 20, 2010

If all the earnings are as good as expected, then what's the selling about? If the outlook is so good, and analysts are reiterating buys and accumulates, why do they lower the price targets substantially? What was the rally about?

News today: The Health Care Bill is about taxes. So is the Finance Bill. Oil disaster in Gulf is worse than Hurricane Katrina, and the worlds help is turned away. Feds declare war on States rights and people think everything's alright. They're looking toward elections to come; can all that's been lost really be re won? What was this rally about?

Market volume is low, summertime. Summer is hot, summertime. Did we get heatstroke, or is it just a lot of steam? What was the rally about?

Soros is getting louder everyday, he now wants to finance your free speech away. Are we that happy about freedoms lost? What is this rally really about?

Monday, July 19, 2010

Traders love the scent of earnings season. Twitter,and StockTwits are full of predictions and most if not all, and that includes me, has an opinion.

Some earnings are predictable, or they used to be at one time, so timing them on the build to announcement was a fun play. Then there were the sell on the news crowd, no matter what the earnings, the sell of was predictable. One time, seems long ago now, buying into the announcement was an almost sure thing, because no matter what it was, as long as it was positive, the market reaction was to buy more. I'm pretty sure that those days are gone, so today, playing it with caution is the best way. It's really best to be in cash before announcement and at the ready for the next play once the results are in.

The potential of the earnings trade is good once the announcement is made, and it's also a safer play once the fluctuation subsides. Since most earnings are announced pre or post market, your platform has to be able to take orders and be current and accurate. It's best to get ready for the ones that are popular. It is also best to leave the initial reaction go by and use them for potential range.

Earnings are magical, they can make a great addition to your trading arsenal, but it's not the scent of napalm, rather perhaps more like Chanel No5? Or perhaps, "The Scent of a Woman" but I'll leave that comparison up to the guys.

Friday, July 16, 2010

Nothing kills a traders dream faster than the inability to trade; yet many go head first into trading without a second thought about it, until forced to stop.

The number 1 killer of trading capital is holding losers. In other words, not setting stop or not allowing them to work. Many traders just eyeball a stop, or use mental stops then they change those as the price moves against them. As the pain is given in small doses, they get used to the pain, until panic sets in and they cut the large loss loose as a bad appendage (usually at the bottom).

The number 2 killer working in tandem with killer #1 is letting winners turn into losers, because target is set too high. It is important to know a stock and it's potential daily move. When sight is set too high, and such is not met, many traders think waiting for it will bring them more riches, therefore allowing a winner to fluctuate into a loser. Once a winner turns into a loser, the potential is even greater that the trader will not stick to a stop therefore creating a #1 killer of trading capital.

The number 3 killer is insisting in ones own mind that the trade is good;insisting on being right, rather than, giving in and recognizing, quickly, that they are on the wrong side of the trade. In other words it's like waiting for your ship to come in; and waiting and waiting and: another great potential of this too, ending as killer #1.

The number 4 killer is trading too much, too fast, and /or too high maximizing capital limits and not allowing for cushion so capital remains in control of the trader and not in the brokers hands. Overextending capital and margins can lead to a painful realization that the trader is not longer in control of the trade as the margin comes due. This killer will stop your trading because it has potential of violation of rules, which could take you out of the day trader game.

Are there more? Yes. Are there worse? Well, I suppose if you put all your trading capital on one trade, it could be. But I just presume that I don't have to point that out as a bad idea.

As you reduce your trading capital, so also you reduce your ability to day-trade. Keep it in mind next time you are tempted to yank the stop loss because your trade has gone wrong. Again. All traders need to first and foremost learn capital preservation and trading management before putting a greenback dollar on a trade.

Thursday, July 15, 2010

Some people wait for JPM other wait for AAPL then there is GOOG the oft previous breathless wait for earnings which everyone knew would beat but the question was by how much.

In the theatre of the absurd, we have "Waiting for Godot" a character who never arrives but around whose arrival or lack of, two characters are contemplating to commit suicide. Although at one point I could have argued the case that there were traders like that with GOOG, but I don't see it happening anymore. It's almost as if GOOG has become secondary to other "important" earnings watches of the market now and only discussed in the light of possibilities when China comes into thought; GOOG may actually stay in this position unless they pull a surprise that no one sees coming.

What that surprise could be, I do not know, but I know not to write off GOOG in importance quite yet. Their dominance may be argued about currently is not really the issue. Maybe more important is that they have the ear of the current administration and what goes on underneath, we have yet to determine.

I wondered why the issue of censorship came up recently when it was obviously evident that they capitulated about it years ago. Is the current purpose to get Americans more used to the idea? The internet bill is still one of the most threatening to free speech, in my opinion, and it has become one that current government officials are quietly addressing. How come GOOG is not upset about censorship in America? It fought about it tooth and nail with the Bush administration over the issue of child pornography, yet there is not even a whisper about the Obama administration trying to curtail internet information for the masses by using the excuse that there is "too much information" available.

Arguing that people having a hard time determining the importance, reliability of all that information is creating confusion, therefore government is necessary sort it out for them is absurd. I'm thinking we do not need to wait for Godot to commit suicide if we continue to allow our attention to be diverted from the reality of what is to come.Waiting for GOOG to argue against censorship may indeed be like Waiting for Godot.*

Wednesday, July 14, 2010

The daily patterns are there the same hot start and slow finish, low volume.Usually this time of year pivots on earnings. Good, bad, whispers, expectations and the day more or less works around announcements and news watch. Somewhere in the middle of the day: lingering lunches in the park no rush to return early for afternoon trading. Fairly predictable, you say?

This good start of summer earnings season is nice and I'm already seeing some traders being lulled into a euphoric state. Dancing has the same effect on me and sometimes I wonder which is more dangerous, but usually I snap out of it in time to get home safely. I wonder, however, if many traders do? All we have to remember is the FlashAttack or perhaps another AAPL day. Certainly AAPL was an unexpected free fall today affording some action outside of earnings. Not to mention RIG and BP another diversion which seems to forever fascinate speculators about who to hate next in the Gulf oil leak.

Nevertheless, I wonder how long this will last? How far are we forecasting? Today's announcement that our deficit sits at 1Trillion dollars no longer phases anyone. Warning by a financial committee chair that we have a "growing" problem not a "going" problem seems not to register. New 2000 page financial bill doesn't cross curious analytic thoughts, even when mentioned that it does not change the rules which got us into the mess. Have we gotten that numb to the state of affairs and gotten lulled back into the feelings of well being? When I see traders talk how we are out of the woods, I wish I could dance in a meadow with flowers in my hair, but this ain't the summer of love.

Tuesday, July 13, 2010

A while back I wrote about the color of trading where I pointed out that green is green. It seems however that there is an element to trading much like in fishing: the fish story; you know, the one that got away; or in trading the continual great trade.

New traders watching the many posts may think that the only trades that count are the ones that are big gainers or that they are easy to do. Most of us know however, that small gains are appreciated as well as large ones. There are days when multi point trades are not as abundant, so where you put your target for gains can make a difference between winning and losing. It's with the accumulation of gains where a trader succeeds not with the number of trophies. Expecting only larger gains robs the trader, especially the beginning trader, of the confidence that is necessary to build better trades. So, as you assess your day of trades, be grateful for the small ones as well, because slow as it may be, even the green grass grows a little everyday.

Monday, July 12, 2010

Ever watch a trade go by, then wonder why? I am still amazed how often it happens even if it's just seconds that go by as I realize I did it again. Oh, I can see the tape and see the potential trade, yet not always do I “bite”. Do you ever wonder why you don’t? I have my reasons, do you have yours? Am I in doubt? If I am what about? Let’s see if I can list them:

What if I misread the tape and I lose? (afraid to lose)

When I enter it always goes “wrong”. (self fulfilling prophecy)

I just want to make sure it’s the right decision, so wait for 1 more tick. (self doubt)

I failed the trade before; what if I fail this trade too. (pattern repetition)

I can’t be always “right”. (lost confidence)

It can’t possibly go much higher/lower. (false psychic)

I want to be sure before I commit. (wish to be always correct)

Oh, look there’s another pop, now it’s too late. (resignation)

If you recognize yourself in of the above scenarios, you suffer from lack of conviction for which there is only one cure: Practice. There is nothing that builds confidence better than practice. But there is one element before practice that must also be done for a successful practice session: Homework.

Homework is the examination of each stock you pick for the day or week. Homework is deciding your entries and targets. This preparation is essential for success because the more you know the more ready you are to take the trade and have less doubt about it.

Friday, July 9, 2010

At some point silence and observation is best, especially when all has been said. Of course that does not mean that everyone has read the story therefore most likely has not gotten the message. But I sink into disbelief when people who do follow the news keep denying reality.

Thursday, July 8, 2010

As things go, yesterday was a real a stunner. Not only did the DOW gain over $276 points today, it retraced 42% of it's losses in just 2 days. I guess climbing the wall of worry is no longer in vogue. You can say, as I heard the news mention tonight, that investors piled on to snap up some bargains from a beaten down market, but I have some problem with that scenario especially if you consider the more recent bad news.

The DOW took 10 days to lose 980 points; granted one day was over 300 points, but that is more likely of a down day than an up day. Yet in recent months, time and again, we have witnessed run ups as frequently if not more so, even some last hour 200 point rallies. That type of pattern were unheard of since the dot com days. Consider also that this rally comes the day before some important economic reports: the jobless rate, both ongoing and new, crude inventories, consumer credit and on Friday the wholesale inventories; not to mention we are just beginning the second quarter earnings reports. Normally I would expect a much more cautious rally considering those. So, what exactly is going on?

The exact answer we may never know, but either the whole world population, sans me, knows that all those figures are going to be great, therefore they are truly collecting to reap the gains coming in the next few weeks, or maybe they know, that "debt is a sign of wealth", like Calif. Congressman Pete Stark recently lectured, and of course as President Obama is currently lecturing about how well our recovery is progressing on his Summer of Recovery tour. Then again, maybe the Kool Aid is more delicious than usual.

Pardon me for being such a killjoy cynic, but I just don't see what changed between last week and this to give us such a great rally. I know about the coiling, you can feel that in a day, for a day and yes, there needs to be a relief of the pressures in the market, but the way the rally progressed today, also suggested something much bigger, greater, like maybe all our debts will be forgiven, or Calif. solved all it's problems and it won't sink the sea, or some such fabulous news. But I cannot find one on the headlines and if no one can point one out to me, then I shall remain skeptical, and I will remain forever humble for not knowing as much as the rest of the world; but then, I am one of those who keeps coming up with 4 when I add 2+2. Oh, well, I guess I 'll have to keep living in Never Never Land.

Wednesday, July 7, 2010

As traders we tend to have money on the mind, yet the Dollar signs are really not the end game; or at least I hope not. Trading like in any other profession, involves hard work and the rewards are the pay. But I suggest that all traders better think of a goal to do with that pay or the rewards will become hollow once the green or gold glint rubs off.

Goals are not only good for motivation, but also good for the feeling of accomplishment. Something other than money to feel. When you actively do something, create with your hands, learn with your mind, or travel to another area of the world. All takes you not just mentally, but physically to a different place and once you finish, a feeling of accomplishment is the added reward. This is the feeling that makes it all worth the time you input into the work.

Without goals, people tend to float and become obsessed with the doing rather than the enjoyment of the journey. In other words, traders can become addicted to trading. So, although a daily goal for earnings is important, a goal for what to do with that accumulated sum becomes paramount.

Like with any business or professional plan, take some time out to plan your goals. Then, the next time you sit at your desk at the start of the trading day, your list will be there with you making the whole process more meaningful. Celebrate your accomplishment when you reach each goal and add another goal to the list. If you do it each time, you will be forever motivated to work and to reach another goal. As each goal is reached and another becomes the purpose behind your work, you will slowly realize that there's nothing that you can't accomplish.

Tuesday, July 6, 2010

As fresh summer days turn sweltering, it seems that trading slows gathering the heat for release as new energy in the fall. Summer trading seems sometimes fast, sometimes slow. Kind of lazy like summertime should be; but don't let it catch you napping.

Most noticeable is the diminishing volume as families, and people in general like to take time off during the lazy days. But there is also a daily rhythm change, longer lunches perhaps and lazier afternoons, as most trading seems to take place early in the day. The rhythm is a slower pace like a slow dance, with a lagging shift, as if pausing in reflection before the turn. Activity picks up again in the final hour, as traders wake from an afternoon nap to quickly decide how to position for the next day with final setups.

Summertime, in my opinion, is a good time to learn, a good time to train, and a good time to play, if one lowers expectations and is content with fewer trades.

Friday, July 2, 2010

Now I come to the explanation for the "47" attached to my twitter name: 4th day, 7th month. 4th of July: my birthday. Each year has been like fireworks in my life; or at least it started off with a bang, although for many years I was not aware; but with a birthday like that, I figure they had allow me entrance into my adopted country: the U.S. of A. I think that also explains at least on the surface, why I'm such a patriot and perhaps why I am such an outspoken defender of freedom.

Since my arrival here, I have watched the country celebrate and appreciate it's freedoms less and less and willingly give self determination away more and more. Today, Fourth of July cannot be called Independence Day Celebration in many schools, flags are no longer proudly hailed at twilight's last gleaming. Our President and First Lady are ashamed of the country they are supposed to defend and represent, and have openly embraced and flaunted our enemies images while banning and shunning our allies. Unfortunately they reflect the sentiment of many Americans.

I see the government being increasingly disrespectful to the same people they are supposed to represent, ignoring and being arrogant toward the constituents wishes. I see a people becoming more disrespectful and rude toward each other, giving no consideration to points of view which would argue with theirs. I hear total smearing and media reporting without investigation.

I have this black thought in my head of us waking up one day to an announcement: that all people have to go to their local police stations and register where they live and how long they've lived there and if visiting, where are they from. Sounds like the census don't it? Upon registering, the people are advised that they have to return to the police station and get permission if they plan to leave the district for an extended time.

People, upon the next visit to their bank are advised of some new regulations, to find that they are no longer allowed to withdraw all their funds without an approval from the IRS or some other government agency. This, perhaps buried in that 2000 page financial package we are now having shoved on us.

Scary thoughts aren't they? If you think it's far fetched, think again.. it has happened to the Japanese and German Americans during the world wars and it can happen again, to us.

The more government help you want the more you'll get, beyond your wildest imagination. Ignorance comes out of ignoring what is happening and refusing to do research. Like in trading, if you refuse to do research, you'll be the controlled, not the controller of your trades.

This 4th of July remember to put God back into your trust and worship, not government.

Happy Birthday to me and America; I hope we both see another one to celebrate,
Anni

Thursday, July 1, 2010

As traders we like to pride ourselves in finding the perfect spot to get in/out of a trade or at least predict the turn. Some think it is the bottom and the top, yet those are really not the best for it's usually where most get hurt. Virtual and real trading rooms are awash in blood of traders trying to catch the perfect bottom and tears for awaiting the perfect top.

I oft remind myself, and my trading group, about "The Colors of Trading" especially during times like this when it is so tempting to search for that market bottom. The problem is not that one takes a calculated risk; the problem arises when one tries to prove themselves to be correct. The temptation to stick with a trade on the wrong side is ego driven which can lead to ignoring stops. Of course it usually ends in bleeding.

Equally ego driven is the "perfect exit" at the max as if that extra penny or two will make a new record of profits gained. Well maybe, but that can lead to tears while waiting for that penny; gains are washed down the drain as the trade turns but the hope for a new high/low does not.

So if you can identify with these scenarios, next time remember "The Colors of Trading":

There is only one shade of green. Which means profit is profit not matter how much, if you can take it to the bank, it's a successful trade.

On the other hand,

There are two shades of red: "Pink and Blood". Realize that being stopped out of a trade means you limited your loss to a tolerated level, therefore the loss is pink with a only tinge of blood. Yet if you ignore your stops or don't use one at all, your trade can bleed you death.

"Pink" losses allow you to trade again, but "Blood" losses may stop you from trading all together. So don't discount the discipline and the control of your own trading destiny.

About Me

a posse ad esse or from being able, to being

In trading as in living, We must see the possible in order to create the actual. Through a maze of charts, indicators and endless outlook chatter, we must create our own vision and from that actualize our possibilities. In short, create and realize our dreams.
With my experience and ability to visualize, I can help you realize yours.
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DISCLAIMER

Day Trading with Anni is a blog and website intended for education, entertainment and information only. The content provided herein is not to be construed as recommendations to buy or sell stocks of any kind. They are simply the opinions of the author. It is possible that the editor of this blog may own, buy, or sell stocks presented. All readers, traders, or investors should consult a qualified professional before trading any stock. The author is not an investment advisor. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts made by the author are committed at the reader's own risk, financial or otherwise.That said, all content is under copyright by the author.